Diageo also benefited from a number of major acquisitions during the year, although Mr Walsh hinted that a deal over José Cuervo, the world’s biggest tequila maker by volume, could still be some way off.

The City had expected Diageo to buy José Cuervo, which the FTSE giant distributes outside Mexico, earlier this year. Diageo’s distribution agreement expires in June, but Mr Walsh hinted that takeover talks could go to the wire with Mexico’s Beckmann family, which owns the José Cuervo brand.

“This was never going to get resolved until the termination of the distribution agreement was within sight,” Mr Walsh said. “Why would you send your child off to the broad wide world until you have to?” he said, adding that the ball was now in the court of Juan Beckmann, the family’s patriarch.

Mr Walsh said he would not be pressured into “frittering away” Diageo’s £1.6bn cash mountain. The company has made no secret of its interest in José Cuervo and is also eyeing a controlling stake in India’s United Spirits, but Mr Walsh stressed any deal would have to be on the right terms.

“I do not worry about having an A-rated balance sheet. People who worried about such [cash-rich] companies prior to the financial crash are what got such companies into the problems they were in. Fools and money are easily parted,” he said.

Much of Diageo’s success is down to the burgeoning middle classes in regions such as Asia, Latin America and Africa, but Diageo is also pouring more marketing pounds into targeting female drinkers, recruiting female role models such as Mad Men actress Christina Hendricks to promote its brands. Diageo also has the over-50 age group in its sights in developed markets owing to their higher spending power.

Sales in the UK dropped 2pc last year, but sales of its “reserve” brands rose as older drinkers splashed out on expensive tipples.

The group recommended an 8pc increase in the final dividend to 26.9p, giving a total dividend of 43.5p, payable on October 22.